Inflation fears among executives have decreased sharply around the world in the past six months, according to the latest McKinsey global survey on economic conditions. Respondents answered this survey in early September, after commodity prices had eased and Lehman Brothers had filed for bankruptcy, but before the US government bailout of financial institutions.¹ Despite this ongoing turmoil and a notable lack of confidence in national economies, respondents indicate that many companies have some flexibility to cope: most of those seeking external funding have so far been able to find it, respondents who predict higher inflation are also likely to report that their companies will be able to raise prices, and a majority of all executives expect the productivity of their companies to increase.